Failing the test - the budget 2012

Fabian adds his own comments to those prepared by the Labour Party Shadow Treasury Team.

Labour Party view of the present situation and the March 2012 Budget

Fabian's comment

The government promised change but things have got worse not better. Their policies have failed on jobs, growth and the deficit.

One million young people are unemployed.

Our economy has stalled. The OBR is predicting just 0.8% growth in 2012 compared to 2.5% forecast in last year's Budget. And the UK is growing at half the rate of the United States.

The government is set to borrow £150 billion more than planned because of slower growth and higher unemployment.

This government - any government - must be judged on its performance. The Conservatives continue to peddle out the mantra that our economic stagnation is the result of the last Labour government's actions and policies. They have now been in power for nearly two years and if their policies were any good there would be some sure signs of progress by now. No amount of political wriggling can now hide the fact that their policies have failed.

This is a Budget where millions are asked to pay more, so millionaires can pay less:

14,000 people earning £1 million or more are getting a tax cut of over £40,000 each year.

A family with children earning just £20,000 loses £253 a year from this April. This is on top of the VAT rise which is costing a family an average of £450 per year.

And this Budget includes a £3 billion tax raid on pensioners over the next four years. The freeze in the personal allowance for pensioners will see 4.4 million pensioners who pay income tax losing an average of £83 per year next April. People who turn 65 next year will lose most - up to £322.

Blinkered (or perhaps even seduced) by the propaganda from the wealthy; the Conservatives have swallowed hook-line-and-sinker the myth that the very well-off are needed for the country to succeed and lost the plot entirely about the financial circumstances of most of the popualtion.

Even on the Government's bogus calculations the 50p top rate of tax has raised £1 billion in its first year. The Chancellor could have used the money to cut fuel duty, reverse cuts to tax credits, reduce cuts to police officers or help pay the down the deficit - but instead he chose to cut taxes for the richest 1% of earners. This is the wrong choice from a government that is totally out of touch.
When people on middle and low incomes are being squeezed by rising fuel prices, seeing their tax credits and child benefit cut, when one million young people are out of work and there's a big deficit to clear, it is completely the wrong priority to cut taxes for people earning over £150,000.

The Chancellor claimed this was a "Budget which rewards work." But at the same time as cutting taxes for the very richest, the government is pressing ahead with huge cuts to tax credits for working families next month which will leave thousands of families better off quitting work and living on benefits.

We see here the true sense of priorities of the present government. By no stretch of the imagination can the reduction in tax for the very wealthy be seen as correct in the context where many other vital needs are so pressing.

Buried in the small print of the Budget, is that George Osborne has hit pensions with a £3 billion granny tax.

George Osborne's announcement means that the personal allowance for over 65s is being frozen in cash terms, so that the increases in the Personal Allowance for everyone else catches up until they are the same. There are 4.77 million over 65s at the moment paying income tax who will lose out in real terms.

The freeze in the personal allowance for pensioners will see 4.4 million pensioners who pay income tax losing an average of £83 per year next April. And people turning 65 next year will lose most - up to £322.

Please read my blog on this that was written shortly after the budget when I was truly angry at the immorality of taking away a small but important financial advantage that had long been offered to the elderly in our society.